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University vice-chancellor pay, performance and (asymmetric) benchmarking

Adelina Gschwandtner () and Richard McManus ()

Studies in Economics from School of Economics, University of Kent

Abstract: We study the pay of UK universities chief executives (‘vice-chancellors’) over a ten year period. Although there is a correlation between pay and performance, with better performing institutions paying higher salaries, we find limited evidence that this relationship is causal; that is, we find no statistically significant link that a change in pay leads to a change in performance, or vice-versa. Instead, we find strong support for an asymmetric benchmarking behaviour, where those institutions with below average pay increase their vice-chancellor’s salaries quicker than those with above average pay. We simulate a model whereby different institutions target different places of the distribution of salaries and demonstrate that inflation of pay can be explained by this behaviour.

Keywords: Executive Compensation; Performance Pay; Efficiency Wages; Benchmark (search for similar items in EconPapers)
JEL-codes: G3 J33 Z13 (search for similar items in EconPapers)
Date: 2018-05
New Economics Papers: this item is included in nep-lma
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